Roadshow Entertainment Pty Ltd v Cel Home Video Pty Ltd and Anor Matter No Ca 40550/95 [1997] NSWSC 473 - NSWSC 1997 case summary — Zoe

Parties

Applicant/Plaintiff:

# Roadshow Entertainment Pty Ltd

Respondent/Defendant:

Cel Home Video Pty Ltd and Anor Matter No Ca 40550/95 \[1997\] NSWSC 473

Legislation Cited (4)

Acts Application Act 1969

Fund Act 1923

Acts Application Act 1969

Fund Act 1923

Cases Cited (25)

Roadshow Entertainment Pty Ltd v Cel Home Video Pty Ltd and Anor Matter No Ca 40550/95 [1997] NSWSC 473 (10 October 1997)

HELD: (allowing the appeal): (1) The agreement imposed an obligation upon CEL/Vision to remain in business to give Roadshow a continuing benefit. Turner v Goldsmith [1891] 1 QB 544 applied. (2) The sale of the assets of CEL/Vision to a third party was a repudiation. (3) The breaches by Roadshow in failing to pay the amounts due on 31 October and 30 November 1993 were not fundamental and did not confer on CEL/Vision an immediate right of rescission. (4) CEL/Vision had not validly terminated the agreement. (5) Roadshow was not prevented by its breaches from rescinding the agreement for the fundamental breach by CEL/Vision. Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1961] EWCA Civ 7; [1962] 2 QB 26; Nina's Bar Bistro Pty Ltd v MBE Corporation (Sydney) Pty Ltd [1984] 3 NSWLR 613, and State Trading Corporation of India Ltd v M Golodetz Ltd [1989] 2 Lloyd's Rep 277 applied. (6) Set-off at law in New South Wales was abolished by the Imperial Acts Application Act 1969 (NSW). However Roadshow was entitled to withhold monies from CEL/Vision on the basis of an equitable set-off. (7) Equitable set-off is available against an assignee for liquidated claims payable in the future. Young v Kitchin (1878) 3 Ex D 127 and Government of Newfoundland v Newfoundland Railway Co (1888) 13 App Cas 199 applied. (8) Equitable set-off is also available against a receiver. N W Robbie & Co Ltd v Witney Warehouse Co Ltd [1963] 1 WLR 1324, George Barker Transport Ltd v Eynon [1974] 1 WLR 462 and Parsons v Sovereign Bank of Canada [1913] AC 160 applied.

The problem which arises when a principal, having appointed an agent for a certain term, goes out of business before the expiration of the term, is a familiar one. It may arise because the principal disposes of an unprofitable undertaking, or goes into voluntary liquidation, or decides as a matter of policy to discontinue a business, or for any one of a number of reasons. As Street CJ observed in Coulter v Readhead [1931] NSWStRp 3; (1931) 31 SR (NSW) 432 at 437, there are numerous reported cases in which the Courts have had to consider whether contracts of this character can, without breach, be brought effectively to an end by terminating the business in connection with which they were made (eg Turner v Goldsmith [1891] 1 QB 544; Reigate v Union Manufacturing Co (Ramsbottom) [1918] 1 KB 592; Northey v Trevillion (1901) 18 TLR 648; Lazarus v Cairn Line of Steamships Ltd (1912) 28 TLR 244; Re Premier Products Ltd [1965] NZLR 50).

Sometimes one party or the other may seek to rely upon an implication; either to the effect that, at least in certain circumstances, the principal may go out of business without being involved in breach of obligations to an agent, or to the effect that, since the arrangements can only take effect so long as the principal carries on a certain business, the principal will not of its own motion put an end to that business (cf Stirling v Maitland [1864] EngR 752; (1864) 5 B&S 840, Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206 at 224). The principles governing implications are well settled. In particular, any such implication must be necessary, and must not contradict an express term (Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337).

The test of whether a term is essential, so that a breach will give rise to an immediate right of rescission, is that stated by Stephen, Mason and Jacobs JJ in DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423 at 431:

The terms of cl 15.1 make it clear that the parties did not intend that an immediate right of rescission would arise on a breach of cl 9.1. A right to terminate for breach after notice excludes any right to terminate without notice, and the continuing failure to remedy any breach did not involve further breaches. See Larking v Great Western (Nepean) Gravel Ltd [1940] HCA 37; (1940) 64 CLR 221 at 235-8 per Dixon J.

(1982) 149 CLR 337

(1995) 39 NSWLR 640

(1978) 138 CLR 423

(1940) 64 CLR 221

(1985) 155 CLR 342

(1989) 168 CLR 385

(1950) 81 CLR 418

(1961) 107 CLR 466

(1992) 11 WAR 40

(1992) 38 FCR 490

(1972) 126 CLR 597

(1936) 56 CLR 50

(1928) 41 CLR 212

(1981) 150 CLR 1

(1992) 37 FCR 445

(1993) 32 NSWLR 362

(1995) 56 FCR 354

(1933) 48 CLR 457

(1936) 54 CLR 361

Roadshow Entertainment Pty Ltd v Cel Home Video Pty Ltd and Anor Matter No Ca 40550/95 [1997] NSWSC 473

At a glance

Court

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Judgment (93 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (25)

Roadshow Entertainment Pty Ltd v Cel Home Video Pty Ltd and Anor Matter No Ca 40550/95 [1997] NSWSC 473 (10 October 1997)